STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF REAL ) ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 88-4688

)

GEORGE SHERBON, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on March 7, 1989, in St. Petersburg, Florida.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Post Office Box 1900 Orlando, Florida 32802

For Respondent: Daniel B. Schuh, Esquire

248 Mirror Drive North

St. Petersburg, Florida 33701 BACKGROUND

By administrative complaint filed on August 30, 1988 petitioner, Department of Professional Regulation, Division of Real Estate, charged that respondent, George Sherbon, a licensed real estate broker, had violated Subsection 475.25(1)(b), Florida Statutes (1987) in conjunction with a real estate transaction that began in April 1987. Thereafter, respondent requested a formal hearing to contest the agency's action. The matter was referred by petitioner to the Division of Administrative Hearings on September 22, 1988, with a request that a hearing officer be assigned to conduct a hearing.

By notice of hearing dated November 8, 1988, a final hearing was scheduled on December 29, 1988, in St. Petersburg, Florida. At the request of respondent, the hearing was rescheduled to March 7, 1989, at the same location. On January 5, 1989, the case was transferred from Hearing Officer Diane D. Tremor to the undersigned.

At final hearing petitioner presented the testimony of Paul D. Martin, Cheryl Lee Hutton, Anna Martin, and G. M. Clifford Pack. Also, it offered petitioner's exhibits 1-8. All exhibits were received into evidence.

Respondent testified in his own behalf and presented the testimony of Frank

Dicenzo, Vincent D. Puzar, and Tony Black. Also, he offered respondent's exhibits 1 and 3-8. All exhibits were received in evidence.

The transcript of hearing was filed with the agency on March 17, 1989 but was not forwarded to the undersigned until March 29, 1989. Proposed findings of fact and conclusions of law were filed by petitioner and respondent on April 3 and 7, 1989, respectively. A ruling on each proposed finding of fact is made in the Appendix attached to this Recommended Order.

The issue is whether respondent's real estate license should be disciplined for the reasons stated in the administrative complaint.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. At all times relevant hereto, respondent, George Sherbon, was a licensed real estate broker having been issued broker's license number 0348688 by petitioner, Department of Professional Regulation, Division of Real Estate (Division). When the events herein occurred, respondent was employed as a salesman for V. P. Stone, Inc., a real estate firm located at 5905 Gulf Boulevard, St. Petersburg Beach, Florida.

   
   

2. On April 1, 1987, Paul D. and Anna Martin entered into a listing agreement with Century 21 Spinning Wheel Ent., Inc. (Century 21) to sell their home at 2543 58th Terrace South, St. Petersburg, Florida. The listing agent was Cheryl Coudry, now known as Cheryl Hutton, a licensed salesperson with Century 21.

   
   

3. On September 11, 1987 respondent solicited and obtained a contract for sale on the Martin property executed by Frank Dicenzo, a resident of Pittsburgh, Pennsylvania, who had a daughter living in the St. Petersburg area. Dicenzo had responded to an advertisement run by Sherbon in a Pittsburgh newspaper. After a week or so of negotiations, the parties eventually agreed to a sales price of

   $92,500, and the final contract was executed on September 20, 1987. The contract called for Dicenzo to make an initial $100 deposit when the contract was executed and an additional deposit of $19,900 by September 25, 1987, or a total deposit of $20,000. Dicenzo gave respondent the initial $100 which was deposited into the escrow account of V. P. Stone, Inc. The contract provided further that the sale would be contingent on Dicenzo obtaining a $72,500 first mortgage. Finally, in accordance with Dicenzo's request, the contract provided that Dicenzo could take occupancy of the premises four weeks after the loan was approved. It is noted that Dicenzo initially asked for occupancy by October 16, 1987.

   
   

4. On September 18, Sherbon introduced Dicenzo to Tony Black, a loan officer at Savings of America, a local lending institution, for the purpose of Dicenzo making a loan application.

   
   

5. On September 24, or the day before the additional deposit was due, Dicenzo became ill with what he described as a bleeding ulcer and decided to return to Pittsburgh and stay at his mother's home. Before he left, Dicenzo did not make the additional deposit as required by the contract. According to Dicenzo, he placed no great significance on the September 25 due date and felt that if the deposit was made "within a reasonable time," it would be okay. Respondent was aware of the September 25 deadline and attempted to get a check

   for the $19,900 deposit from Dicenzo's daughter but was unsuccessful.

   Respondent contends he kept trying to contact Dicenzo in Pittsburgh during the next five week period but was unable to reach him. Dicenzo acknowledged he knew that Sherbon was trying to contact him but still made no effort to talk to Sherbon. Instead, he simply told his daughter he would take care of the matter when he returned to Florida in late October. Whether this message was conveyed to Sherbon is not of record.

   
   

6. Sherbon prepared contemporaneous notes concerning the transaction and used these to refresh his recollection at hearing. He pointed out that such notes were kept on all real estate transactions. According to his notes, he telephoned Coudry and Black on September 24 concerning Dicenzo's illness and the fact that he was having difficulty obtaining the additional deposit from Dicenzo. Although Black recalled talking with Sherbon, he denied that Sherbon told him that there was no deposit and said such information was a material item that would have prompted him to stop processing the application until the deposit could be verified. Likewise, Coudry, who could not recall many aspects of the transaction, did recall speaking with Sherbon but remembered Sherbon simply telling her that he was in the process of showing Dicenzo various commercial properties and would be obtaining the deposit at that time. Their testimony is deemed to be more credible and persuasive and is hereby accepted.

   
   

7. Coudry assumed that Sherbon had received the additional deposit since she was never specifically told otherwise by Sherbon. Accordingly, she did not contact the Martins until several weeks after the September 25 due date. Coudry did not learn that no deposit had been collected until mid-January 1988 when Anna Martin disclosed to her this fact.

   
   

8. In the meantime, although the Martins knew the contract was contingent on Dicenzo obtaining a loan, they nonetheless assumed that Dicenzo would have no problem securing a loan and that such a loan would be approved in a week or so. Also, they knew the contract called for possession of the property by Dicenzo four weeks after the loan was approved. Because of these assumptions, and having received no advice from Coudry that the full deposit had not been made on September 25 as required by the contract, the Martins made application around September 28 to buy another home in a nearby modular home park and asked that the application be expedited.

   
   

9. Unfortunately for the Martins, they were far more successful than Dicenzo in securing prompt approval of their loan application. Once approved, and after a closing was held, the Martins had the utilities hooked up, erected a storage shed, and incurred other expenses. Also, they began making mortgage payments on the second house.

   
   

10. On October 24, 1987 the Martins telephoned Sherbon and told him their listing with Century 21 had expired. During the conversation, Sherbon did not mention that Dicenzo had failed to make the $19,900 deposit.

    
    

11. Dicenzo's application with Savings of America was denied on October 30, 1987 because of Dicenzo's "ratio of ... expenses to ... total income." By this time, Dicenzo had returned to Florida and had spoken with Sherbon. At respondent's urging, Dicenzo reapplied to the same institution and was turned down a second time on November 12, 1987. In addition, at Coudry's suggestion, Dicenzo had already visited another lender in October but refused to pay a $250 application fee and consequently did not file an application. Also, through Sherbon, Dicenzo was given the name of a mortgage lender suggested by the Martins but, after three visits, decided not file an application. Information

    regarding the second Savings of America denial was conveyed to Coudry around

    mid-November but, for whatever reason, she did not contact Sherbon regarding the status of the contract. It is noteworthy that at that time Sherbon did not tell Coudry that Dicenzo had still failed to make an additional deposit as required by the contract. Despite the loan application denials, Sherbon encouraged Dicenzo to keep trying to arrange financing so that the deal could go through.

    Dicenzo agreed to do so but, as noted in the following finding of fact, at that point Dicenzo considered the contract to be "null and void." Sherbon's efforts to find financing continued until mid-January 1988.

    
    

12. When the loan application was denied on November 12, Dicenzo construed the contract to be void since the financing contingency was not met. According to Dicenzo, he did not believe the property was tied up while his contract was pending, felt no obligation to make the $19,900 deposit because it meant he would have to transfer funds from a money market account he purportedly maintained in Pittsburgh, and felt no moral obligation to the Martins even though by then they had committed themselves to a second home.

    
    

13. The Martins were advised by telephone on the evening of November 12 of the second turn down of Dicenzo's loan application. By then, however, they were already committed to the second purchase. They claimed they did not learn of Dicenzo's failure to make the $19,900 deposit until mid-January 1988 when Sherbon visited their home and disclosed this fact. This is also borne out by a letter from the Martins' attorney to Dicenzo on December 1, 1987 advising Dicenzo that the contract was void and a claim might be made on his deposit for damages. When the Martins learned that only $100 had been deposited, they filed a complaint with the Division. That prompted this proceeding.

    
    

14. Because of the failed contract, the Martins were unable to maintain two mortgage payments and were ultimately forced to give up the second home at a substantial monetary loss. They have since returned to their first home.

    
    

15. The evidence shows that in the real estate trade, it is not customary or proper for the buyer's realtor to personally contact the seller. Rather, the practice and custom is for the buyer's agent to advise the listing broker of all pertinent developments and the listing broker then relays any necessary information to the seller. Thus, Sherbon had no responsibility to personally advise the Martins of any information pertaining to the contract. Rather, this responsibility rested with Coudry.

    
    

16. Respondent contended he kept Coudry abreast of all developments concerning Dicenzo and that he assumed Coudry would advise the Martins that no deposit had yet been collected. To the extent this version of events conflicts with previous findings, it is not accepted. Sherbon expressed sympathy for the Martins' plight but maintained he was not at fault. There is no evidence that Sherbon has been subjected to prior disciplinary action by the Division.

    
    

    CONCLUSIONS OF LAW

    
    

17. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1987).

    
    

18. Since respondent's professional license is at risk, the Division must prove the allegations in the administrative complaint by clear and convincing evidence. Lewis v. State Department of Professional Regulation, Division of Real Estate, 529 So.2d 751 (Fla. 3d DCA 1988).

19. The administrative complaint charges that, because of his conduct in the Martin transaction, respondent violated all elements except fraud in Subsection 475.25(1)(b), Florida Statutes (1987). These charges will be considered separately below.

    
    

20. By clear and convincing evidence, the Division has shown that, by failing to fully and accurately advise the listing broker of the buyer's failure to make a deposit, respondent is guilty of concealing material facts. Further, the same conduct constitutes misrepresentation since Sherbon failed to make a material disclosure to the seller's agent. He is also guilty of culpable negligence by his continuing failure to disclose this information. Finally, Sherbon, by his conduct, breached the trust imposed in him by the seller's agent. The allegation that respondent is guilty of dishonest dealing by trick, scheme or device must fail since there is insufficient evidence to support this charge.

    
    

21. In reaching the above conclusions, the undersigned has considered respondent's contention that he owed no duty to personally advise the Martins of the status of the deposit. While this statement is wholly correct, Sherbon nonetheless had the responsibility to advise the seller's agent of this same information. In resolving the question of whether a full disclosure was made to Coudry, the undersigned has accepted the testimony of witness Coudry, as amplified by witness Black, and rejected the conflicting testimony of respondent.

    
    

22. In its proposed order, the Division has suggested that respondent's broker's license be revoked. Rule 21V-24.001, Florida Administrative Code (1987) sets forth the suggested penalties for statutory and rule violations by licensees. According to paragraph (8) of the rule, for a violation by a licensee of subsection 475.25(1)(b), the Division may impose a penalty of up to five years suspension or revocation of a license unless the record contains evidence of mitigating or aggravating circumstances. Revocation of the license appears to be far too serious a penalty under the circumstances. While the Martins suffered a financial loss, it was partially due to their purchasing a second home before learning if all contingencies in the contract had been met. In addition, the seller's agent (Coudry) was less than diligent in her duties and must bear some modicum of responsibility in this affair. In view of this, it is concluded that a three month suspension of Sherbon's license is an appropriate penalty.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of violating Subsection

475.25(1)(b), Florida Statutes (1987) to the extent noted in the conclusions of law and that his broker's license be suspended for three months. All other charges should be dismissed.

DONE and RECOMMENDED this 26th day of April, 1989, in Tallahassee, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 26th day of April, 1989.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-4688

Petitioner:

1-2. Covered in finding of fact l.

1. Rejected as being unnecessary.

2. Covered in finding of fact 2.

5-7. Covered in finding of fact 3.

1. Covered in finding of fact 5.

2. Covered in finding of fact 10.

3. Covered in finding of fact 7.

4. Rejected since respondent owed a duty to Coudry, and not the Martins, to keep her abreast of all pertinent matters.

5. Covered in findings of fact 7 and 12.

6. Covered in findings of fact 7 and 8.

7. Covered in finding of fact 8.

8. Covered in findings of fact 6 and 10.

9. Rejected as being subordinate to other findings.

10. Covered in finding of fact 11. 18-19. Covered in finding of fact 6.

Respondent:

Respondent's proposed order contains sections entitled "admitted facts", "unrebutted facts" and "uncontested facts". They are ruled upon in that order. Admitted facts:

1. Covered in finding of fact l.

2. Covered in finding of fact 3.

3. Covered in finding of fact 2.

4. Covered in finding of fact 3.

5. Covered in finding of fact 3.

6. Covered in background.

Unrebutted facts:

1. Covered in finding of fact 7.

2. Covered in finding of fact 15.

3. Covered in finding of fact 10. 4-6. Covered in finding of fact 6.

7-8. Covered in finding of fact 5.

1. Covered in finding of fact 11.

2. Covered in finding of fact 12.

3. Rejected since Sherbon learned of the loan denial even though he did not receive a written copy of the turn-down letter.

4. Covered in finding of fact 13.

5. Covered in finding of fact 8.

6. Rejected since the testimony of Anna Martin is accepted as being more credible on this factual issue.

Uncontested facts:

1. Rejected as being cumulative.

2. Partially covered in findings of fact 6, 7 and 16. The remainder is rejected as being cumulative, argument of counsel or not supported by the more credible evidence.

COPIES FURNISHED:

James H. Gillis, Esquire Post Office Box 1900 Orlando, Florida 32802

Daniel B. Schuh, Esquire

248 Mirror Drive

St. Petersburg, Florida 33701

Darlene Keller, Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

Kenneth E. Easley, Esquire

130 North Monroe Street Tallahassee, Florida 32399-0750

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION

FLORIDA REAL ESTATE COMMISSION

DEPARTMENT OF PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE,

Petitioner,

vs. CASE NO. 0158785

DOAH CASE NO. 88-4688

GEORGE SHERBON,

Respondent.

/

FINAL ORDER

On June 20, 1989, the Florida Real Estate Commission heard this case to issue a Final Order. Hearing Officer Donald Alexander of the Division of Administrative Hearings presided over a formal hearing on March 7, 1989. On April 26, 1989, he issued a Recommended Order, which is adopted by the Florida Real Estate Commission as to all Findings of Fact and Conclusions of Law but not as to the Recommended Penalty. A copy of this Recommended Order is attached hereto as Exhibit A and made a part hereof.

The Respondents Exceptions to the Hearing Officers Findings of Fact in Paragraph 6, Page 5 of the Recommended Order are rejected, as said Exceptions speak to credibility; and the Hearing Officer, as the trier of fact, is more capable of evaluating the credibility of the witnesses.

Upon a complete review of the record, the Florida Real Estate Commission finds that the Recommended Penalty should be rejected for the following reason: The testimony elicited which appears in the transcript of the hearing at Pages

32 through 34 and from Line 21 on Page 86 to the end of Page 87 reflects certain mitigating circumstances, which justify imposing a less severe penalty.

Therefore, for the reason cited above, the Commission ORDERS that an administrative fine of $500 be imposed upon the Respondent, which the Respondent shall pay within 30 days of its imposition, pursuant to Rule 21V-10.031, Florida Administrative Code.

This Order shall be effective 30 days from date of filing with the Clerk of the Department of Professional Regulation. However, any party affected by this Order has the right to seek judicial review, pursuant to s. 120.68, Florida Statutes, and to Rule 9.110. Florida Rules of Appellate Procedure.

Within 30 days of the filing date of this Order, review proceedings may be instituted by filing a Notice of Appeal with the Clerk of the Department of

Professional Regulation at 400 West Robinson Street, Suite 309, Orlando, Florida 32801. At the same time, a copy of the Notice of Appeal, with applicable filing fees, must be filed with the appropriate District Court of Appeal.

DONE AND ORDERED this 20th day of June, 1989 in Orlando, Florida.

Darlene F. Keller, Director Division of Real Estate

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true copy of the foregoing was sent by U.S. Mail to: Daniel Schuh, Esquire, 248 Mirror Lake Drive, St. Petersburg, Fl 33701; to Hearing Officer Donald Alexander, Division of Administrative Hearings, 1230 Apalachee Parkway, Tallahassee, Fl 32399-1550; and to James Gillis, Esquire, DPR, Post Office Box 1900, Orlando, Fl 32802, this 30th day of June, 1989.

Director

Docket for Case No: 88-004688

Orders for Case No: 88-004688